UPDATE 2-Sirius XM CEO Mel Karmazin to step down

Oct 23 (Reuters) - Sirius XM Radio Inc Chief
Executive Mel Karmazin will step down in February, a move that
comes at a time when media mogul John Malone's Liberty Media
Corp is trying to wrest full control of the satellite
radio broadcaster.

Shares of the company were down 2 percent at $2.81 in
trading after the bell on Tuesday.

Liberty, Sirius's largest shareholder with a stake of just
under 50 percent, has been trying for months to wrest control of
Sirius and has filed a petition with U.S. regulators to replace
the company's board. Liberty has argued that Sirius should be
more aggressive about pursuing better technology and expanding
internationally.

Karmazin, who famously clashed with Sumner Redstone while at
Viacom Inc, is known for his disdain of working for a
controlling shareholder, and has indicated that Liberty likely
wouldn't need him to stick around if it took control.

Karmazin, who has been at the helm of Sirius for eight
years, will step down on Feb. 1, 2013, after the expiry of his
employment agreement.

"This is not overly surprising as Karmazin's public musings
about the possibility of leaving as Liberty takes over have left
most institutional investors we speak to expecting a departure,"
Lazard Capital Markets analyst Barton Crockett wrote in a note.

Under Karmazin, Sirius has grown its subscriber count to
23.4 million, and maintains an estimated 70 percent market share
of pr e-installed sa tellite radio in new cars sold in the United
States.

"We will keep our foot on the gas and continue driving ahead
to finish 2012 and lay the groundwork for 2013 and beyond,"
Karmazin wrote in an email to employees.

"I'm looking forward to seeing - and listening to - all that
is ahead for SiriusXM in the years to come."

Sirius said its board formed a search committee to consider
both internal and external candidates for its next CEO.

"While we understand, we regret Mel's decision to pursue
other interests and are grateful for his willingness to oversee
a smooth and orderly transition," Liberty CEO John Malone said
in a statement.

Liberty acquired an initial stake of about 40 percent in
Sirius in 2009 as part of a deal in which it loaned the
satellite radio provider $530 million to help stave off
bankruptcy.

In August, Liberty said it plans to spin off its premium
pay-TV network Starz LLC into a separate public company in a
deal seen as taking a step closer to taking control of Sirius
XM.

Liberty Media said it was considering a tax-free spinoff of
its 46 percent stake in the satellite radio provider.

The discussion around an imminent Liberty-Sirius deal
boosted Sirius shares as they touched a year-high of $2.97 in
mid-October.

Liberty shares were down 58 cents at $109.81 in extended
trading on Tuesday.
(Reporting by Supantha Mukherjee in Bangalore and Liana B.
Baker in New York; Editing by Saumyadeb Chakrabarty and Akshay
Lodaya)